The generosity of private capital in UK acquisitions is only illusory

Private equity firms are fishing in the UK once again, and this time they are offering seemingly lavish takeover bonuses of over 50%. Investors must resist being fooled by offers that are less generous than they appear.

After months of shadows, oilfield services firm John Wood Group Plc has opened its books to Apollo Global Management Inc. Payments company Network International Holdings Plc is in talks with a consortium that includes CVC Capital Partners, while specialist veterinarian Dechra Pharmaceuticals Plc is being persecuted. by a group led by EQT AB. Discussed acquisition prices range from 51% to 59% above where the targets’ shares were trading. Apparently those are generous terms: in the five years ending in 2022, premiums on UK cash offerings were typically below 50% and mostly rose 30% to 40%, according to data compiled by Bloomberg.